Correlation Between Rompetrol Rafi and TTS

Can any of the company-specific risk be diversified away by investing in both Rompetrol Rafi and TTS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Rompetrol Rafi and TTS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rompetrol Rafi and TTS, you can compare the effects of market volatilities on Rompetrol Rafi and TTS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Rompetrol Rafi with a short position of TTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rompetrol Rafi and TTS.

Diversification Opportunities for Rompetrol Rafi and TTS

0.72

Correlation Coefficient

Rompetrol Rafi  TTS

Poor diversification

The 3 months correlation between Rompetrol and TTS is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Rompetrol Rafi and TTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTS and Rompetrol Rafi is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Rompetrol Rafi are associated (or correlated) with TTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTS has no effect on the direction of Rompetrol Rafi i.e., Rompetrol Rafi and TTS go up and down completely randomly.

Pair Corralation between Rompetrol Rafi and TTS

Assuming the 90 days trading horizon Rompetrol Rafi is expected to generate 0.61 times more return on investment than TTS. However, Rompetrol Rafi is 1.63 times less risky than TTS. It trades about -0.12 of its potential returns per unit of risk. TTS is currently generating about -0.43 per unit of risk. If you would invest  7.30  in Rompetrol Rafi on August 24, 2024 and sell it today you would lose (0.40) from holding Rompetrol Rafi or give up 5.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Rompetrol Rafi  vs.  TTS

Rompetrol Rafi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rompetrol Rafi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

TTS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TTS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Rompetrol Rafi and TTS

The main advantage of trading using opposite Rompetrol Rafi and TTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rompetrol Rafi position performs unexpectedly, TTS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in TTS will offset losses from the drop in TTS's long position.

The idea behind Rompetrol Rafi and TTS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.